Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market-related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.

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On This Day in History:

iTunes: On April 28th, 2003, Apple revolutionized the music industry with the launch of the iTunes Store. For its time, a sleek interface and large collection of songs offered users a convenient way to purchase and download their favorite hits. If you don’t remember those days, digital piracy was rampant, and the iTunes store provided a legitimate alternative to the artists and their fans. Since the launch of iTunes 21 years ago, we’ve seen the rise of digital distribution in other media, including movies, TV shows, podcasts, and books thanks to the road that iTunes paved.

AI-powered cameras installed on Metro buses to ticket illegally parked cars (Los Angeles Times)
Los Angeles Metro is rolling out AI-powered cameras on its buses to monitor and ticket cars parked illegally in bus lanes. Developed by Hayden AI, these cameras are part of an effort to speed up bus service and make it more accessible, especially for passengers with disabilities who need clear paths to board. Starting with a summer test phase and a full launch expected by the end of 2024, the $11 million project will initially issue warning citations to help drivers adjust. To ensure fairness in enforcement, humans will view the videos to confirm violations before any tickets are issued. [Link]

NASA’s Voyager 1 Resumes Sending Engineering Updates to Earth (NASA)
NASA’s Voyager 1 is back online and sending data after a clever fix by the Jet Propulsion Laboratory team. They worked around a faulty computer chip by reconfiguring the spacecraft’s memory, allowing us to receive updates on its health and status again. This sets the stage for restoring the flow of scientific data. Meanwhile, its sibling, Voyager 2, is cruising along smoothly in interstellar space. [Link]

Elon Musk and SpaceX hit reusable-rocket milestone with Starlink satellite launch (MarketWatch)
Last week’s launch of 23 Starlink satellites marked a milestone as it marked the 300th time that SpaceX has landed a rocket booster back down on Earth after a launch. SpaceX has an ambitious schedule for 2024 with 12 launches planned per month.[Link}

Apple reportedly slashes Vision Pro headset production and cancels updated headset as sales tank in the US (PC Gamer)
Apple has reportedly halved production volumes of its Vision Pro mixed reality headset due to lower-than-expected demand, even before its international release. Analyst Ming-Chi Kuo suggests initial demand in the US was tepid, potentially leading to the cancellation of a planned 2025 update. The high price tag of $3,499 and the device’s bulky design likely deterred many potential buyers, despite its advanced technology and sleek interface. The limited appeal of the Vision Pro doesn’t necessarily reflect on the broader market for mixed reality and virtual reality headsets, as its high cost and size make it a niche product. [Link]

Environmental

Characteristics of Power Plants Seeking Transmission Interconnection (Berkeley Lab)
As of the end of 2023, nearly 12,000 projects, totaling 1,570 gigawatts (GW) of generator capacity and 1,030 GW of storage capacity, are actively seeking transmission interconnection in the United States. These projects, dominated by solar, storage, and wind technologies, represent the forefront of the nation moving in the direction of renewable energy. The report provides insights into the challenges of integrating such large-scale renewable resources into the grid, including increasing wait times in interconnection queues and low completion rates for proposed projects. [Link]

The world’s electric car fleet continues to grow strongly, with 2024 sales set to reach 17 million (IEA)
This year, EVs are making waves, with more than one in five cars sold globally expected to be electric. According to the IEA’s latest Global EV Outlook, we could see about 17 million EVs sold in 2024. The surge is driven by strong sales in China, the US, and Europe, where policies and lower battery costs are making EVs more appealing. If current trends and policies continue, half of all cars sold by 2035 might be electric. Under optimal conditions, this could jump to two-thirds, dramatically cutting down reliance on oil for road transport. [Link]

Investments

New York Stock Exchange tests views on round-the-clock trading (Financial Times)
A survey from NYSE suggests an interest in round-the-clock trading, as opposed to the 9:30 am to 4:00 pm window we operate in now. 24 Exchange, a startup backed by Steve Cohen, is seeking SEC approval to launch the first 24-hour exchange of its kind. Although he said his traders would adhere to the five-day workweek given regular market hours, Cohen also has invested in golf with the idea that it is only a matter of time before the four-day workweek becomes mainstream thanks to advancements in AI. [Link]

The Average Lifespan of an ETF Just Got a Little Shorter (Bloomberg)
The average lifespan of ETFs has shortened with the closures of two funds this week, the Defiance Israel Fixed Income ETF (CHAI) and the Opportunistic Trader ETF (WZRD). While CHAI struggled to attract assets despite initially strong demand, WZRD garnered $25 million in just one month but still plans to shut down. The closures highlight the challenges and concentration in the ETF industry, particularly in the active ETF market where a few issuers dominate. Investors tend to favor more passive ETFs with strategies closely resembling their benchmarks. In other news, certain ETFs face outflows as geopolitical tensions ease and hopes for Fed interest-rate cuts diminish. [Link]

Policy

Trump Allies Draw Up Plans to Blunt Fed’s Independence (WSJ)
Although no one specifically is quoted in the article, allies of Donald Trump are “reportedly” devising proposals to diminish the Fed’s independence if he secures a second term. Suggestions range from giving Trump a say in interest-rate decisions to subjecting Fed regulations to White House review. Some even propose that Trump has the authority to replace Jerome Powell as Fed chair before his term ends in 2026. While Trump hasn’t finalized his approach to the Fed, he’s expressed interest in reshaping its leadership. However, these efforts face legal and institutional challenges, with some Republican lawmakers expressing opposition to presidential interference in monetary policy. [Link]

Population Trends

U.S. birth rate drops to record low, ending pandemic uptick (CBS News)
The birth rate in the US continues to decline, reaching a new record low in 2023, according to the latest CDC report. Approximately 3.6 million babies were born last year, marking a 2% decrease from 2022. This downturn ends a brief rise in births observed during the COVID-19 pandemic. If current trends continue, the US population could shrink without increased immigration or other demographic changes. Teen birth rates have also started to plateau, and cesarean delivery rates have increased. [Link]

Economic Trends

I made $70K selling NYC restaurant reservations — and I don’t even live in New York (New York Post)
Securing restaurant reservations in NYC has become fiercely competitive. A college student earned $70,000 last year by selling reservations for places like Ralph Lauren’s Polo Bar. Reservation resale platforms are also thriving, with one reportedly making $6 million last year. Celebrities like Justin and Hailey Bieber reportedly use these services, with fees ranging from $500 to $1,000. Despite the profits, restaurants are struggling with fake reservations and bots, affecting their business and accessibility for regular patrons. [Link]

US agency poised to ban worker ‘noncompete’ agreements (Reuters)
The FTC recently approved a rule to ban employer noncompete agreements. The decision is intended to promote worker mobility and potentially boost wages by up to $488 billion over the next decade. It also anticipates the creation of over 8,500 new businesses annually. The rule, set to take effect in August, has stirred much debate. Supporters argue it frees workers from restrictive practices that limit job opportunities and suppress wages, especially in lower-wage industries. However, critics, including some major business groups, argue that the rule oversteps legal boundaries and could harm the economy by making it harder to protect trade secrets. [Link]
Vacancies are a Red Herring (Ned Resnikoff)
When discussing housing and homelessness, a common question arises about utilizing vacant apartments to solve the crisis. However, this notion oversimplifies the issue, as many vacancies are short-term or involve newly built, unoccupied units. Moreover, studies indicate that homelessness rates are highest in cities with the lowest vacancy rates, suggesting that a lack of available housing, rather than artificially withheld units, exacerbates both high housing costs and homelessness. Therefore, truly addressing the crisis requires the construction of more affordable housing, not just reallocating existing spaces. [Link]

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Have a great weekend!

The S&P 500 may have rebounded since this time last week, but sentiment has continued its slide.  This week’s AAII Sentiment Survey saw only 32.1% of respondents report as bullish, the lowest percentage since  11/2/23.  In total, bullish sentiment has declined 17.9 percentage points since just four weeks ago when it hit 50%. That is the largest drop since December 2021 for any given four-week span.

Given the drop in bulls, bears have picked up to 34%. However, that reading was little changed week-over-week with a modest 0.1 percentage point increase.  Like bulls, this is the highest bearish sentiment reading since last November.

Although the increase in bearish sentiment has been less pronounced, the inverse moves with bullish sentiment have been enough to push the bull-bear spread into negative territory for the first time since 11/3.

The 24 consecutive weeks with a positive bull-bear spread was one of the longest streaks in the survey’s history and was tied with the 24-week streak that ended in July 2021 for the longest since 2015 (31 weeks).  In all, there have only been 11 streaks that lasted at least 20 weeks in a row.

US equity futures were already significantly lower on earnings weakness from Meta (META) prior to the 8:30 AM ET release of today’s key economic indicators, but they took another leg lower after Q1 GDP came in much weaker than expected and PCE came in hotter than expected.  Weaker economic growth and higher inflation are certainly not bullish for equities.

With about 15 minutes to go before the opening bell at 9:30 AM ET, the S&P 500 ETF (SPY) is trading down more than 1% in the pre-market.

Below is a look at all prior gaps down of 1%+ at the open for SPY since it began trading in 1993.  This would be the 352nd opening gap down of 1%+ for SPY in the last 31 years, and on average, SPY has traded up 0.09% from the open to the close on these days with positive returns 51.4% of the time.

This would be the 68th time that SPY has opened down 1%+ on a Thursday, and on Thursdays specifically, SPY has averaged an open-to-close decline of 0.10% with positive returns 47.1% of the time.

As shown in the table, Friday gaps down of 1%+ have historically been followed by the biggest intraday bounce-backs (+0.39%), while Monday has been the worst weekday for bounce-backs with an average open to close decline of 0.20% after 1%+ gaps down.

This will be the 14th time that SPY has gapped down 1%+ during the current bull market that began in October 2022.  On these days, SPY has averaged an open-to-close gain of 0.21% on days when it gaps down 1%+.  (That makes sense, though, since it’s a bull market.)